Ohio bribery scandal reinforces need to quash nuclear bailouts

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Tuesday’s release of a racketeering complaint filed by the U.S. Attorney’s Office involving Ohio’s Speaker of the House alleging bribery and misconduct to secure power plant bailouts is not a surprise for some legislators, residents and groups in Pennsylvania who do not support government subsidies to prop up nuclear power plants. 

“When politically powerful interests can pay to have their favored policies passed into law or ensure that specific resources are pre-selected to profit, we undermine energy and environmental progress,” said former Ohio Public Utilities Commission Chairman Todd Snitchler, now president and CEO of the Electric Power Supply Association, in a statement.

In Ohio on July 21, federal prosecutors charged Ohio House of Representatives Speaker Larry Householder, one of his aides and FirstEnergy Solutions lobbyist Juan Cespedes in a racketeering conspiracy, according to the 82-page criminal complaint filed by the U.S. Attorney’s Office in the U.S. District Court for the Southern District of Ohio. The FBI on Tuesday subsequently arrested all three men and two others.

The Republican Speaker and his cohorts allegedly used more than $60 million in bribe money from FirstEnergy Corp. — which isn’t directly named in the complaint — to get Householder re-elected, put money in their own pockets, and help get passed House Bill (HB) 6, introduced in April 2019 to make several changes to Ohio’s energy law and bail out two of FirstEnergy’s aging nuclear power plants, according to the complaint.

U.S. Attorney for the Southern District of Ohio David DeVillers during a Tuesday news conference called the case “likely the largest bribery, money-laundering scheme ever perpetrated against the people in the state of Ohio.”

“These kinds of situations have played out in multiple states just this week and we urge voters, legislators and regulators to keep a close watch and protect transparency and competition,” Snitchler observed. “When policymakers do the bidding of special interests, consumers lose.”

Allegedly, Householder and the others approached FirstEnergy Solutions about funding the bribe, which would pay to help efforts for and against HB 6, a bill ultimately signed into law in July 2019 by Ohio Gov. Mike DeWine to loosen Ohio renewable energy standards.

HB 6 also provides two bailouts: one for the Ohio Valley Electric Corp., which is partially owned by DP&L and others; and for Akron-based FirstEnergy Solutions, now named Harbor Energy, which owns and operates the Davis-Besse and Perry nuclear power plants. FirstEnergy Solutions was a subsidiary of FirstEnergy Corp. until it broke away in February.

Under HB 6, Ohio electricity customers from 2021 until 2027 must pay a new monthly surcharge ranging from 85 cents for residential customers to $2,400 for large industrial plants, according to the text of the bill, which also provides subsidies for coal plants in Ohio and Indiana.

FirstEnergy Solutions allegedly wired more than $38 million to Generation Now Inc., a nonprofit political action committee that supported Householder’s bid to return as House speaker, toward efforts around HB 6, which was backed by both Householder and FirstEnergy Solutions. Generation Now is also named in the federal complaint.

“Today we see the lengths Ohio utility interests went to in order to secure a multibillion-dollar bailout at the expense of taxpayers, families and all Ohio consumers to support uncompetitive nuclear- and coal-fired plants,” Snitchler said on Tuesday. “Rather than let the market provide the best outcomes for energy customers, and against the warnings and complaints from almost all corners, money and political influence won the day and helped secure passage of Ohio HB 6.”

Utility companies like Energy Harbor contend that states should prioritize their nuclear plants’ carbon-free energy rather than the less expensive, but dirtier fossil fuels, a stance that is supported in states like Ohio, Illinois and New Jersey, which all have approved increased ratepayer subsidies and tax incentives to support their nuclear plants.

But thus far, that strategy hasn’t worked in Pennsylvania, where myriad opponents argue that such policies would thwart the state’s growing natural gas industry and saddle ratepayers with higher energy prices.

In fact, a Pennsylvania alliance of energy trade groups, labor unions and other stakeholders last year successfully helped fight legislation that would have targeted additional funds to five nuclear plants across the state.

And in October 2019, Pennsylvania Gov. Tom Wolf announced that Pennsylvania would join the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program that charges power producers for any emitted pollution and then reinvests the proceeds collected from RGGI auctions back into the state. Entering into that multistate program would impose a carbon tax that would impact employers engaged in electric generation, manufacturing and other industries operating in the Commonwealth.

Energy Harbor in March decided to rescind a deactivation notice issued for its nuclear Beaver Valley Power Station in Shippingport, Pa., a decision that also followed Pennsylvania legislators’ ditched plans less than a year earlier to subsidize the state’s nuclear plants.

“The decision to rescind the deactivations for Beaver Valley was largely driven by the efforts of Governor Wolf’s administration to join the Regional Greenhouse Gas Initiative which will begin to help level the playing field for our carbon-free nuclear generators,” Energy Harbor CEO John Judge said in a March statement. “In addition, our retail growth strategy now offers carbon-free energy that allows customers to meet their environmental, social and sustainability goals.” 

And while Judge said Energy Harbor is excited about the RGGI process moving forward, the company plans “to revisit deactivation if RGGI does not come to fruition as expected” in early 2022.

However, enacting RGGI would have dire economic consequences in the form of lost jobs and higher electricity costs for consumers, business advocacy groups and many Pennsylvania lawmakers have stated, and would put Pennsylvania at a competitive disadvantage to other states.

Circling back to HB 6, both Republican and Democratic lawmakers in the Ohio House earlier today said they plan to introduce legislation to repeal HB 6 due to the federal racketeering complaint involving Householder. 

“Corruption has no place in our government, regardless of political party. When corruption is revealed, it is important we act quickly to fix what has been broken,” said Ohio Democratic State Rep. Mike Skindell in a statement. “Ohio has been under a one-party rule for decades and what we are seeing are the consequences of that undemocratic arrangement.”

Skindell, who is one of the Ohio lawmakers who plans to introduce an HB 6-repeal bill, said that with deeply gerrymandered districts, “Republican politicians feel invincible and are more beholden to special interest groups and corporations than they are to their own constituents. HB 6 was the manifestation of this alleged corruption.”

Snitchler of the Electric Power Supply Association agreed that it’s time for Ohio to repeal HB 6.

“If HB 6 is allowed to remain in effect,” he said, “it will legitimize what is alleged to be a corrupt legislative process. Ohio citizens deserve better.”